May 18. 2024. 3:38

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[THU ready] Berlin aims to fend off drugs shortages without general prices adjustments

A draft law tabled by the German government aims to avert drug shortages in the face of rising production costs. But generics producers warn that the plans are inadequate and broader price adjustments are needed to reach this goal.

Shortages of common drugs that plagued many EU countries at the start of this year have cast a spotlight on problems surrounding the security of supply, especially for generics, drugs that are no longer protected by patents.

In Germany, shortages especially concerned children’s medicines and left many parents scrambling to find painkillers or fever medicines.

While part of the reason for the supply squeeze was an unusually high frequency of respiratory diseases after several years of lockdown measures, generics producers in the country have warned that the shortages revealed more structural problems concerning the pricing system for generic medicines.

While production costs are surging due to record-high inflation, the price at which producers can sell their drugs is limited by mandatory discounts put in place by the government to make medicines affordable for insurers and patients.

Squeezed in between these two factors, the industry warns, production has become economically unviable for many drugs.

“We expect that as a result of high inflation, individual generics will disappear from the market,” Bork Bretthauer, managing director of Pro Generika, the association of German generic and biosimilar companies, told EURACTIV Germany.

A survey conducted by the association among its member companies showed that within the next twelve months, companies will be forced to stop the production of one in ten generic drugs since it is no longer economically viable, he explained.

According to Bretthauer, antihypertensives, antidepressants, painkillers, and antibiotics are especially likely to be affected.

Berlin takes cautious steps

Pro Generika already warned of potential shortages in the face of inflation as early as October last year.

At the time, Germany’s health ministry tabled a law set to stabilise public health insurance but did not include measures to prevent drug shortages. Instead, the law focused on steps to make insurers more financially sustainable.

Four months and several drug shortages later, the ministry has now tabled a draft law focused specifically on fighting drug shortages.

The draft bill, published on 14 February, “contains structural measures to strengthen the security of supply in the area of generic medicinal products”, a ministry spokesperson told EURACTIV Germany.

But rather than making general adjustments to the mandatory discount prices in place, the ministry’s approach is based on monitoring the situation and making individual price adjustments where and when need be.

To this end, the law will strengthen monitoring and assessment mechanisms on drug supply and establish an early warning system for potential shortages, the spokesperson explained.

“In the event of an emerging market constriction that carries the risk of a supply bottleneck, the ministry can take measures for fixed-price medicines and discounted medicinal products,” she added.

This more targeted approach is meant to limit the impact on those bearing the costs of more expensive medicines, according to the ministry.

Adjust prices to save drugs, generics industry tells EU

The generics industry is urging the EU and national governments to show “leadership” and take immediate action against rising inflation, which has resulted in drugs’ shortages and has put patients in need to the test.

Too little, too late?

But for Bretthauer, the law falls short of taking effective steps to make sure generics stay on the market.

The law “will not be able to prevent market withdrawals – and does not even aspire to do so,” he said. “It has no relieving effect on the bulk of supply, and it does not provide any short-term relief for generic companies at any point.”

Bretthauer also pointed out that the bill focuses on antibiotics and painkillers and would thus only cover around 1% of generic drugs. “It does nothing for patients with heart disease, pain or depression,” he stressed.

Instead, Pro Generika wants the inclusion of criteria that would “allow producers to diversify production” in all mandatory discount contracts. Moreover, according to Bretthauer, price adjustments are needed for drugs not currently covered by the new bill.

German youth to take biggest hit amid medicine shortage

As key medicines, including antibiotics, fever drugs, and painkillers, are becoming scarce in German pharmacies, doctors warn that children and teenagers could be hit hardest.

According to the Federal Agency for Drugs and Medical Devices, the shortages are exclusively due to …

Are mandatory discounts the problem?

In the view of public health insurers, however, the fixed prices for generics are not the key driver of drug shortages.

“The causes of supply bottlenecks are manifold, as various studies show,” Jens Ofiera from the umbrella organisation of German public health insurers (GKV) told EURACTIV Germany.

Instead, he argued, the high concentration of production on very few sites globally means any bottlenecks can have global ramifications. On a global market, Ofiera added, changes to Germany’s pricing system would only have a very small effect.

He also stressed that the association “regularly reviews the reference price market and adjusts reference prices to a changed market situation at appropriate intervals. This can mean lowering but also raising them.”

For Ofiera, the government should take steps “to structurally address the existing supply problems in the provision of medicines. Allowing the pharmaceutical industry to charge purely higher prices is not a sustainable solution.”

Price ceilings on drugs with no alternatives must be raised, Czech industry says

According to the Czech pharmaceutical industry and Czech state authorities, setting price caps cannot solve drug shortages as the measure could even further jeopardize drug availability.